MT 5 The Great Depression & The New Deal

1. MT 5The Great Depression & The New Deal Learning Target: #1 What caused the Great Depression? What steps were taken by the federal government (congress, president Hoover and FD Roosevelt) to fight the economic crisis?

2. Causes of the Great Depression The Great Depression was a time in USA history were no one had money. • Stock market crash- Buying on Margin and Over speculation • Banks collapse (run on banks) • Overproduction of expensive goods • Employees wages decrease or • Layoff workers = Extremely high unemployment • High tariffs caused low demand for goods • Federal reserve keeps interest rates low

3. Stock Market Crashes The rise before the fall The fall October 29, 1929 Black Tuesday Stock prices drop People lost millions • The 1920’s create a lot of success for USA • New inventions led to new companies which resulted in new stock for purchase • From 1920 to 1929 stock prices soared = Bull Market (long period of time were the stock prices rise) • Investors began buying stocks on MARGIN (payment plan for buying stocks) • Problem: People bought stocks but didn’t have the money to pay it back if the stocks fell • Investors also began over speculating on stock prices (buying stocks on a guess that the price of the stock would increase)

4. More issues with the economy Banks collapse Over production causes wage cuts and unemployment Factories were able to produce a lot of stuff in the 1920’s Factory owners did not increase wages People bought expensive things on installment plans When people could not pay all bills they cut back on stuff When people cut back on stuff and companies have an overproduction of stuff This caused factories to cut wages and lay off workers (high unemployment) • Banks had lent money to stock investors • When the stock market crashed the investors couldn’t pay their loans = banks lost money • Banks had invested depositor’s (people’s) $$ in the stock market • When the stock market crashed the bank lost all those peoples money • Banks closed • People afraid their bank might close made “bank runs”- lots of people withdraw their money from a bank at the same time

5. More issues with the economy High Tariffs = High Taxes Federal Reserve mistake The federal reserve is the main USA bank When the economy began to slow the Federal Reserve kept loan rates low Effect People/companies kept borrowing money = banks lost more money • Foreign countries stopped buying American made goods because of high tariffs Effect • Slowed USA production of goods down even more = more lay offs= more unemployment = less people spending money

6. USA has the Great Depression • http://www.youtube.com/watch?v=RJpLMvgUXe8&feature=player_detailpage

7. What steps were taken by the federal government (congress, president Hoover and FD Roosevelt) to fight the economic crisis?

8. President Hoover’s Actions • He hoped to down play the depression. He was against giving government money to the poor families. • He called business leaders (factory, railroad, other owners) to voluntary act – not lay off people • The business owners did this for 1 month • Hoovers next step was to increase public works (government funded building projects) • He hoped this would replace some jobs lost in the private sector (factory jobs) • Hoover set up the National Credit Corporation to help troubled banks loans money (1931) • Hoover set up Reconstruction Finance Corporation so the government could loan money to business, banks, railroads and agricultural (1932)

9. The depression hurts

10. Americans angry • Farmers revolt- stop growing crops, burn crops, destroy crops (corn, wheat, milk) • People protest, march, broke into grocery stores, join communist rallies to overthrow government • WW1 veterans march to get $1,000 bonus from government • Congress failed to approve • Protesters camped out and the government sent in the National guard to forcefully remove Hoover failed to be reelected.

11. Franklin Delano Roosevelt The New Deal

12. Roosevelt & New Deal • In his inaugural speech, “First of all let me assert my firm belief that the only thing we have to fear is fear itself.” • First 100 days as president Roosevelt & congress pass 35 laws = The New Deal • 1st- Bank holiday = close banks • Said banks were safe • 2nd – Securities and Exchange Commission • Watch stock market • Get involved in private investing • Provide insurance to banks to protect individuals bank accounts

13. Roosevelt creates many programs to help the poor • The following programs put people to work or provided other assistance • Tennessee Valley Authority – built dams for flood control and electrical power • Civilian conservation corps – gave jobs to men 18-25 in the forest • Agricultural Adjustment Act – paid farmers to not grow certain crops to increase prices so farmers could make money • Federal Emergency Relief Agency – let the federal government give state governments money to help the unemployed • Public works and Civil works administration – gave people constructions jobs (schools, roads, airports, parks, bridges) http://www.youtube.com/watch?v=wF80co_Y_Bc&feature=player_detailpage